Slobbiest

Monday, November 21, 2005

>By Holly Yeager and Stephanie Kirchgaessner in Washington
>Published: November 22 2005 00:05 | Last updated: November 22 2005 00:05
>>
The likelihood of federal charges against members of Congress intensified on Monday when a key player in a broad corruption probe pleaded guilty to conspiracy and agreed to co-operate with investigators.

Under a plea agreement with the Department of Justice, Michael Scanlon, a former aide to Tom DeLay, the powerful Texas congressman, admitted that he had conspired to defraud four Native American Indian tribes that operated or hoped to operate casinos.

He faces up to five years in prison and agreed to pay nearly $20m in restitution. Mr Scanlon, who operated a grassroots public relations firm, admitted that he and an unnamed lobbyist conspired to charge the tribes high fees and split the profits.

Mr Scanlon and Jack Abramoff, a Republican with close ties to Mr DeLay, earned more than $80m from Indian tribes from 2001-2004. Those transactions are being examined by the Senate Indian affairs committee, and by federal investigators.

Mr Abramoff has been indicted in Florida on fraud and conspiracy charges involving gambling boats.

Court papers in Mr Scanlon?s case also allege that a congressman received campaign contributions and valuable gifts, including a trip to Scotland to play golf, in exchange for official acts to benefit clients of Mr Scanlon and Mr Abramoff.

The case against Mr Scanlon is being led by the department?s Public Integrity office, a division that oversees the prosecution of elected and appointed public officials.

Most prosecutions by the DoJ involve large-scale fraud or corruption and hinge on the co-operation of relatively minor players who agree to plea bargains, and to testify against others, in return for more lenient sentencing.

The action by the DoJ potentially represents a serious threat to several lawmakers.

Although Mr DeLay?s earlier indictment on unrelated money laundering charges forced him to give up his seat as majority leader in the House of Representatives, it is unclear how strong the case against the Texas Republican is.

Mr DeLay and his supporters have accused Travis County district attorney Ronnie Earle, a Democrat, of being on a political witchhunt.

It would be more difficult for Mr DeLay or other Republicans to make such claims about federal prosecutors.

WASHINGTON (CNN) -- Michael Scanlon, a former aide to Rep. Tom DeLay and a lawyer who worked with high-powered Washington lobbyist Jack Abramoff, pleaded guilty to a federal conspiracy charge Monday.

As part of the deal with the Justice Department, Scanlon is expected to testify against Abramoff, two government sources told CNN last week.

Scanlon was charged Friday with one count of conspiracy as part of an ongoing federal criminal investigation of the lobbying activities of the two men, the sources said.

Scanlon, 35, agreed to pay more than $19 million in restitution for the alleged kickbacks he received as part of the conspiracy to defraud his and Abramoff's clients.

As part of the plea agreement with federal prosecutors, Scanlon admitted plotting to cheat clients and corruptly influence federal officials.

He is free on a $5 million bond and according to The Associated Press faces up to five years in prison.

Among the high-profile clients of Scanlon and Abramoff were Indian tribes, which hired them to gain political access in Washington.

Last week, prosecutors filed "criminal information" in U.S. District Court alleging that Scanlon conspired to "corruptly offer and provide things of value, including money, meals, trips and entertainment, to federal public officials in return for agreements to perform official acts" benefiting Scanlon and his lobbyist partner.

The partner is identified in the court documents only as Lobbyist A and is not facing charges. One government official told CNN that Lobbyist A is Abramoff.

Prosecutors also allege Scanlon was trying to "devise a scheme and artifice to defraud" lobbying clients.

Prosecutors detail a "stream of things of value" given to an unnamed congressman, identified in the court documents as Representative No. 1.

The items listed include "lavish" trip to Scotland to play golf, tickets to sporting events, and campaign contributions to the representative and his political action committee in exchange for a series of actions by that representative.

In the court documents, prosecutors allege Scanlon and Lobbyist A, "together and separately, sought and received Representative No. 1's agreement to perform a series of official acts, including but not limited to agreements to support and pass legislation, agreements to place statements into the Congressional Record, meetings with Lobbyist A and Scanlon's clients, and advancing the application of a client of Lobbyist A for a license to install wireless telephone infrastructure into the House of Representatives."

Officials would not identify Representative No. 1.

"It was a purpose of the conspiracy for Scanlon and Lobbyist A to enrich themselves by obtaining substantial funds from their clients through fraud and concealment and through obtaining benefits for their clients through corrupt means," the complaint states.

The government alleges the conspiracy lasted from January 2000 through at least April 2004.

Prosecutors allege Scanlon and the lobbyist "would falsely represent to their clients that certain of the funds were being used for specific purposes, when in fact, Scanlon and Lobbyist A would use those funds for their own personal benefit and not for the benefit of their clients."

Abramoff's name surfaced earlier this year amid ethics questions about DeLay, a longtime friend. The Washington Post has reported DeLay took two expensive overseas trips that Abramoff and other lobbyists bankrolled -- a violation of House rules, if true.

DeLay has denied any wrongdoing, calling the report "just another seedy attempt by the liberal media to embarrass me."

The Texas Republican was forced by House rules to step down as majority leader after he was indicted October 3 by a Texas grand jury on unrelated felony charges of conspiracy and money laundering. He was replaced by Rep. Roy Blunt of Missouri.

Michael Scanlon, a former partner to lobbyist Jack Abramoff, pleaded guilty Monday to conspiring to bribe public officials, a charge growing out of the government investigation of attempts to defraud Indian tribes and corrupt a member of Congress.

Scanlon, a former aide to Rep. Tom DeLay, entered the plea before U.S. District Judge Ellen Segal Huvelle and agreed to pay restitution totaling more than $19 million to the tribes.

Scanlon, who is expected to cooperate in the investigation of Abramoff and members of Congress, could face up to five years in prison.

By Jonathan D. Salant
Nov. 21 (Bloomberg) -- For more than a year, Michael Scanlon has been a shadowy presence behind former partner Jack Abramoff, the Republican lobbyist at the center of a corruption probe. Now, Scanlon may help prosecutors raise the investigation to a higher level.

Scanlon, a former aide to Representative Tom DeLay, is scheduled to appear today in U.S. District Court to present a plea bargain with the Justice Department likely to lead to his cooperation with investigators. His testimony would ratchet up the pressure on Abramoff and aid prosecutors in widening the investigation to members of Congress, such as Republicans DeLay and Representative Robert Ney of Ohio.

Scanlon, 35, is the second person to face criminal charges in connection with the Justice Department-led probe of the 46- year-old Abramoff. In October, a federal grand jury indicted the White House's former chief procurement officer, David Safavian, once an Abramoff associate, for obstruction and making false statements.

``Now you have two people instead of one,'' said Stan Brand, a former counsel to the House of Representatives when it was controlled by the Democrats. ``What you're building is a ladder. You have Abramoff at the intermediate step, elected officials above him, and Scanlon and Safavian underneath.''

Beyond the potential legal concerns, Scanlon's cooperation with authorities may spell political jeopardy for Republicans leading into next year's elections, especially if he helps draw other lawmakers into the investigation. ``He knows where all the bodies are buried,'' said a congressional aide who worked with Scanlon.

`Representative #1'

The Justice Department on Nov. 18 charged Scanlon with conspiring with ``Lobbyist A'' -- identified by a person close to the investigation as Abramoff -- to defraud Indian-tribe clients and corrupt federal officials. Those officials included a lawmaker identified only as ``Representative #1.''

Ney, chairman of the House Committee on Administration, who took an Abramoff-sponsored trip to Scotland in 2002, said earlier this month that prosecutors had subpoenaed records. A spokesman for Ney, 51, said the lawmaker hasn't been told he's a target.

Scanlon's lawyer, Stephen Braga, said his client agreed to the plea bargain to ``resolve the charge,'' declining further comment.

As investigators get closer to Abramoff, they may also get closer to DeLay, said Craig McDonald, director of Texans for Public Justice, an Austin-based group that has called for a special prosecutor to investigate DeLay.

`Dirt on DeLay'

``It's likely that Abramoff has lots of dirt on Tom DeLay,'' McDonald said. ``The further Abramoff sinks into trouble, the more likely he is to start pitching that dirt.''

DeLay, 58, who once called the lobbyist ``one of my closest friends'' and went on an Abramoff-sponsored trip to Scotland in 2000, stepped down as House majority leader after being indicted in September in an unrelated campaign-finance case in Texas.

Other Republican lawmakers may find themselves under scrutiny as well. Senator Conrad Burns, a Montana Republican, helped win a $3 million government award for the Saginaw Chippewa Tribe of Michigan to build a school, the Washington Post reported earlier this year. The Interior Department ruled the tribe was ineligible because its Soaring Eagle casino makes it one of the richest, the Post reported. The tribe, an Abramoff client, donated $32,000 to Burns from 2001 to 2003.

``The only action Senator Burns ever took was as a request from other senators,'' said his lawyer, Cleta Mitchell. ``He has absolutely no connection with Mike Scanlon.''

Abramoff

Though prosecutors say Scanlon shared millions of dollars in fees from Indian-tribe clients with his former associate, he has escaped the attention heaped on Abramoff, a tireless networker who organized trips abroad for lawmakers and owned a downtown restaurant where he hosted fund-raising events.

``There should have been a lot more written about Scanlon,'' said Melanie Sloan, a former federal prosecutor who now heads Citizens for Responsibility and Ethics in Washington, an advocacy group. ``He wasn't the one taking the trips and having the meetings with members of Congress. He was the backroom guy.''

When Illinois Republican Dennis Hastert became House speaker in 1999, he blamed Scanlon for stories surfacing in the press suggesting DeLay was the real power and the new speaker was a figurehead, according to a former Hastert aide.

The aide, speaking on condition of anonymity, said Hastert asked DeLay to fire Scanlon. Scanlon left the congressional office shortly thereafter and eventually joined Abramoff's firm, later founding a public affairs company, Capital Campaign Strategies.

Deriding the Tribes

What came next was laid out by the Senate Indian Affairs Committee, which has released transcripts of hundreds of e-mails and documents during five committee hearings in the last 18 months. The e-mails are laced with derogatory references by the two men toward their tribal clients. In one December 2001 e- mail, for example, Abramoff referred to their Saginaw Chippewa clients as ``troglodytes.''

Scanlon also was involved in a casino cruise company in Florida that Abramoff and a partner bought in 2000, serving as a spokesman. Abramoff was indicted on charges of fraud and conspiracy in August in connection with his purchase of the company. He pleaded not guilty.

``The Justice Department needs Scanlon to cooperate so they can get everything else,'' said Sloan, who served as an assistant U.S. attorney in Washington from 1998 to 2003. ``Just because he hasn't been in the media forefront doesn't mean he wasn't in the eyes of the prosecutors. I don't think they ever lost sight of Scanlon.''

To contact the reporter on this story:
Jonathan D. Salant in Washington at jsalant@bloomberg.net

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